Summary:
With an amazing competitive market out there, American consumers and business customers are losing their trust in the American banks of United States. They are feeling a sense of concern for their own banks and decide to open newly admitted accounts in Canadian-owned banks, instead. Apparently, Americans believe in Canada's strong financial shapes compared with the United States. This opportunity leads Canadian Banks with a more diversified customer environment. Royal Bank RBC, BMO Bank of Montreal, and TD Canada Trust wants to take a surge in bank deposits, demand for loans, and other banking options. However, customers are already swarming these banks for a safer financial system compared with the American banks.
Connection:
This chapter deeply resides with the cash flow statements and how relevant cash flow is to businesses, no matter whether they are huge corporations or small businesses. As for the banks, they are constantly seeking for "Line of Credits" to issue to customers. This loan arrangement is beneficial to banks because it requires such a high interest rate for customers. It is significant to families with financial needs to have access to a bit more cash to maintain their family's financial position. These normal day-to-day operating activities within a bank may also accumulate profit as the cash flow statements are being completed for the fiscal period.
Reflection:
Many companies are desperate into maintaining their financial positions during this time of the year - the recession. However, there are many who fail in achieving their goals as they struggle to make decisions on enhancing their company's finances. American banks are no exception. Customers from the United States are loosing their trust for their nation's local banks and walking away from them. This leads Canadian banks with great benefits from this financial crisis. Also, this leaves American banks out of control as they are continuously losing customers due to the unhealthy U.S. financial system. In other words, this kind of causes the U.S. with a massive destruction of economic recession without any other paths to reconsider.
3 comments:
Jillian, you make some valid points, but i tend to disagree with some of your opinions. In regards to financing activities, t is true that banks like to issue 'lines of credit', but are being much more careful to who is qualified in acquiring them (much more stricter). Personally, I haven't been aware of a serge of Americans opening or depositing money in Canadian banks. While this might be true on a smaller scale, I do not believe there will be a big demand for this, because some of the major American Banks are still on pretty good ground. Another factor is that the exchange rate (fluctuating dollar). Due to the fact that the financial crisis seems to have started in America first, Canadian banks might be very leerly of getting involved in issuing out to many loans.
- K. Jagpal
I have heard about this piece of news before and a relating piece that there have been loan problems in the United States. It is true that some of the banks in the US are in trouble partly because they have loaned too much money to customers, but also, it is not for sure that we will benefit from this decline in the trust for banks in the US.
Recently, there has been news that more than 50% percent of homeowners in the US own houses that are worth much less than the value it was bought for. This means that for those still with a bank loan to pay off, it will be more than needed to buy the same house now.
Hopefully, we will benefit from this development of trust for Canadian banks and get out of this recession.
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